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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Debt cap: particular types of company: definition of dormant company

Dormant companies

There are a number of provisions in the debt cap rules where a dormant company is excluded from an obligation.

For example, dormant companies are not:

  • included in the gateway test
  • a party to the appointment of an authorised company for statements of allocated disallowances or exemptions
  • included in an election under S331ZA.

The definition of dormant company is in section 353 and is a company that is dormant within the meaning of section 1169 Companies Act 2006 which means that it has no significant transactions. A company incorporated outside the UK can similarly be dormant if it has no significant transactions in a period.

However a UK company is not dormant if there are transfer pricing adjustments made for it under subsections 147 (3) and (5) TIOPA.